If you thought the media in India was fearless and brave, think again. If you thought the new media was even more brave, think twice over.
The government of India appointed the present incumbent Chairman of SEBI, C.B. Bhave in February 2008. There was a cloud over his appointment as there was an on going proceeding against the entity he led NSDL by the regulator, and in the past the regulator had passed several orders against NSDL for negligence arising out of the infamous IPO scam.
Several orders were pending against NSDL at the regulator itself. The government selected the Chairman and for the ongoing action, decided that the cases would be decided by an independent panel of members and the Chairman would recuse himself from such proceedings.
After many months of indecision, an independent panel of non-whole time members was formed comprising of Mr. Mohan Gopal (head of the National Judicial Academy) and Mr. V Leeladhar (deputy governor of the RBI) to decide the cases pending against NSDL (and others). The panel came to a decision on the 4th of December 2008. All orders once signed by the appropriate authority are automatically put up on the SEBI website. I am not aware of a single exception to this rule. In addition, for obvious reasons of natural justice, the order has to be served on the parties. Neither was done.
This suppression was highly successful till the Times of India came out with an expose of the facts (see also ET) on the 24th March 2009. The ToI article quotes extensively from one of the two member-authors of the order. I blogged about this then. Despite the expose, SEBI continued to suppress this order, claiming the Board of SEBI was ‘reviewing’ the order. In the meanwhile, a person claiming to be affected by the IPO scam filed a public interest litigation (writ petition) in the Andhra Pradesh High Court. Several right to information applications were also filed with SEBI trying to pull out the order. It appears the same were denied on the grounds that the matter was pending investigation (though the fact finding ended several years back). The Times of India ran another highly damaging piece based on the PIL: Sebi mum on Bhave’s interest conflict. After a full 11 months (only a week after the ToI’s second article of 31st Oct 2009), the SEBI Board rejected the order as being beyond the powers of the panel. It may be recalled that one of the co-authors of the report is Dr. Mohan Gopal who has founded an academy to teach judges and is commonly known as an eminent jurist. What is most fantastic about the setting aside of the order is that the SEBI Board does not have the power to set aside its own orders in review. It has not done such a review even when relatively junior officers of SEBI pass orders in a quasi judicial capacity – in fact it has rightly not been done by SEBI in its 17 year history.
Clearly, the chapter in this dark period of SEBI is not yet closed and courts will finally decide on the fate of the action, though I am not particularly optimistic because everyone would have moved on by the time a decision arrives. Be that as it may, the role of the media has been even more shameful than the role of the Board. The dark chapter has virtually been blanked out. See the rather timid reporting of this big scandal in the major media – as if this was just another setting aside of an order of SEBI here and here. Most of the media has not even reported this, not even timidly. The sole exception to this has been the Times of India (and Economic Times which re-ran the piece) which is often wrongly vilified as being run by managers rather than by editors.
Even more surprising is the even more silent parallel media or new media of blogs and twitter news. The new media, comprised of millions of people writing about billions of issues has blanked the news even more totally.
Remind me again – am I in India or Myanmar?
Mr Curious Investor,
Before you make fresh attempts by posing an innocuous “curious investor”, please read Prof Sandeep Parekh’s views mirrored by Sucheta Dalal’s latest article on the same topic at
http://www.suchetadalal.com/?id=7b6905bc-e3b9-3352-4b0645737106&base=sections&f&dsq=23607360#comment-23607360
Do you think that your spin to win support, to make it appear as personal vendetta while the issue is topical peppered with analytically conclusive views involving serious discussion of immense national importance?
I bet you are a PR lobbyist or crony journalist who is masquerading as a curious investor.
Any sensible onlooker would have fit grounds to be furious with any “curious investor” who doubts topnotch securities law professor teaching at best B-School of the country and India’s foremost investigative business journalist. !
Come aboard donning another mask, and we’ll spot you again…
Get real, please !
Sir,
I noticed a particular term "losing battle".
Just wanted to clarify what exactly is your aim in this battle?
I have read a lot of articles against sebi by you. You have been one of the greatest critics of SEBI after having left them. But what exactly is your battle woth SEBI?
Just pointing out the flaws with SEBI, will get nothing done apart from possibly damamge investor confidence that its protector is corrupt.
So are you in general saying that SEBI does not work in a manner that is upto the standard, or is it that the management of SEBI does not comprise capable people?
How would you see yourself winning the battle?As in what sort of a result would show that you have won the fight?
I feel bad that SEBI chair has been invited as key note speaker, but the point is, SEBI chair is a big position, a powerful person who represents the face of Indian capital markets. And your disappointement is about SEBI chair being there? or is it about the CURRENT SEBI chair being there?
Thanks and regards,
An investor who is insecure in this market.
I find that all your issues are rhetorical questions, so I guess you are not looking for answers. BTW, losing battle is a figure of speech – you don't need to be in battle to be in a losing battle.
What can an academician do but point towards what is right and what is wrong – I do that for SEBI regulations (as I did before joining SEBI) you can see my articles before joining SEBI criticising aspects of regulations and enforcement of SEBI. I also do that (expose the right from the wrong) for the sad issue of suppression of orders of SEBI as I have explained and the sadder suppression by the media of the events which took place – because the media is beholden to powerful people.
Believe me you have reason to be insecure and anonymous.
Mr. Parekh, you have raised the standard of independent speak beyond fear and favour.
I see that the topic is set on fire here on this blog.
Mr. Hello World is right, and it seems Mr. Bhave to be bit of all the four types cited by Mr. Lippman
“The quack, the charlatan, the jingo, and the terrorist, can flourish only where the audience is deprived of independent access to information.”
Signs seen:
Quack: Abolition of MF commissions (confirmed by many AMFI members) and extension of stock exchange trading period (confirmed by broker/trading community)
Charlatan: Talks of investor interest after being guilty in IPO scam and denying MCX-SX cash/derivative market access for benefitting NSE.
Jingo: SME Exchange Drama instead of repairing OTCEI and constant failure in launch stock lending in India stock markets through NSE and NSDL.
Terrorist: All SEBI Whole Time Members know it better than in-service officers and external journalists.
Reason:
Power corrupts; absolute power corrupts absolutely
Meaning: Literal meaning.
Origin: This arose as a quotation by John Emerich Edward Dalberg Acton, first Baron Acton (1834–1902). The historian and moralist, who was otherwise known simply as Lord Acton, expressed this opinion in a letter to Bishop Mandell Creighton in 1887:
“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.”
Another English politician with no shortage of names – William Pitt, the Elder, The Earl of Chatham and British Prime Minister from 1766 to 1778, is sometimes wrongly attributed as the source. He did say something similar, in a speech to the UK House of Lords in 1770:
“Unlimited power is apt to corrupt the minds of those who possess it”
This thread must not die, Prof Parekh !
Walter Lippmann (1889-1974) has been described as the most influential American journalist of the 20th century. He was a newspaper columnist and an author. One of his books, published in 1920, was “Liberty and the News.” In it, he addressed issues related to journalistic credibility.
Here are some sample quotes worth noting:
“…the most destructive form of untruth is… propaganda by those whose profession it is to report the news… For when a people can no longer confidently repair ‘to the best foundations for their information,’ then anyone’s guess and anyone’s rumor, each man’s hope and each man’s whim becomes the basis of government… Incompetence and aimlessness, corruption and disloyalty, panic and ultimate disaster, must come to any people which is denied an assured access to the facts.”
“In so far as those who purvey the news make of their own beliefs a higher law than truth, they are attacking the foundations of our constitutional system. There can be no higher law in journalism than to tell the truth and shame the devil.”
“The quack, the charlatan, the jingo, and the terrorist, can flourish only where the audience is deprived of independent access to information.”
Posting some links to keep this topic alive, Prof Parekh…
Hats off to Manoj Mitta for his brilliant piece:
http://economictimes.indiatimes.com/SEBI-mum-on-Bhaves-conflict-of-interest/articleshow/5182730.cms
Kudos to Sucheta Dalal:
http://www.suchetadalal.com/?id=cf7356c1-801a-1816-4afd4f05981d&base=sections&f
Dud reporting with dull eye:
http://www.business-standard.com/india/news/ipo-scam-sebi-dismisses-panel/s-adverse-order/375902/
Dumb coverage without any analysis:
http://www.indianexpress.com/news/Sebi-sets-aside-order-involving-Bhave/539394
See how SEBI resorted to Press Release (instead of revealing entire minutes of latest 9th November 2009 board meeting) at
http://www.sebi.gov.in//press/2009/3452009.html
deviating from their own practice of minutes Board Meetings at:
http://www.sebi.gov.in/Index.jsp?contentDisp=AboutSEBI
Must read these documents accessible at undermentioned links.
IPO Scam:
http://www.sebi.gov.in//press/2009/IPO.pdf
DSQ Matter:
http://www.sebi.gov.in//press/2009/DSQ.pdf
RCMSL Matter:
http://www.sebi.gov.in//press/2009/RCMSL.pdf
NSDL is badly indicted while Mr. Bhave has acute heat under his seat since it was sought to be hurried to be buried until PIL helped reveal the truth.
We can’t help notice the timelines for compliance of the initial order which were not followed as it was overruled and overlooked !
It would be nice to analyse the SEBI Board headcount for total strength ascertaining amenable camaraderie and available for influence amongst govt nominees beyond subservient to Chairman, SEBI, the obviousl WTMs !
http://www.sebi.gov.in/Board.pdf
What a royal sham by market regulator for not having integrity and intelligence to apply principles on itself !
Physician, heal thyself – Ceaser’s wife must be above suspicion, ain’t it right ?
do disclose your interest in this subject too – that you were among the authors of the orders that were set aside by courts when you were in SEBI! no suppression of any nature is good.
I never had the powers to pass orders in SEBI. The investigation and the long first order were passed long before I joined SEBI and the two member panel after I left. Even if I time-travelled and upgraded myself to a whole time member and then passed the order – how is that my ‘interest in this subject’? Not only is the comment delusional but also irrelevant. But I’m glad the Board is recruiting people to post anonymous comments on my blog – good signs that it is making a difference.
Though I might be fighting a losing battle – my institute itself has invited the SEBI Chair to speak at the distinguished IIMA Confluence event as keynote speaker.
Sir,
I noticed a particular term “losing battle”.
Just wanted to clarify what exactly is your aim in this battle?
I have read a lot of articles against sebi by you. You have been one of the greatest critics of SEBI after having left them. But what exactly is your battle woth SEBI?
Just pointing out the flaws with SEBI, will get nothing done apart from possibly damamge investor confidence that its protector is corrupt.
So are you in general saying that SEBI does not work in a manner that is upto the standard, or is it that the management of SEBI does not comprise capable people?
How would you see yourself winning the battle?As in what sort of a result would show that you have won the fight?
I feel bad that SEBI chair has been invited as key note speaker, but the point is, SEBI chair is a big position, a powerful person who represents the face of Indian capital markets. And your disappointement is about SEBI chair being there? or is it about the CURRENT SEBI chair being there?
Thanks and regards,
An investor who is insecure in this market.
"Based on the legal opinion, Sebi decided the committee's findings against the regulator are without the authority of law, since it went beyond the confines of its delegation. The two orders which enter such findings have hence been held null and void since the findings cannot be severed from the rest of the orders. The matters in the two orders would be dealt with afresh by the board, with the exception of Bhave." – DNA
Is it that DNA is useless? or what they are saying has some meaning?
"Based on the legal opinion, Sebi decided the committee's findings against the regulator are without the authority of law, since it went beyond the confines of its delegation. The two orders which enter such findings have hence been held null and void since the findings cannot be severed from the rest of the orders. The matters in the two orders would be dealt with afresh by the board, with the exception of Bhave." DNA
was my comment deleted?
Hey Sandeep, but there's nothing new to Suppression at SEBI and orders of Chairman/Adjudicating Officers, etc. and even SAT are routinely suppressed or published belatedly. One argument for suppression of SAT orders is that SEBI has filed appeal against the Order! There is no transparency of which orders should be suppressed. Will one assuredly know if parties involved in major fraud cases have been let go freely? Also, for your information, SEBI keeps "dossiers" of journalists apparently to keep track on whether their articles and price movements/volumes of the shares covered by the article have any correlation. These dossiers are obvious sources of power!
Sandeep, do keep this topic alive!
Dear Mr. Parekh,
Here is the full coverage of this issue:
http://www.barandbench.com/index.php?page=brief&a...
http://www.barandbench.com/index.php?page=brief&a...
Thank you for pointing this out. Sandeep